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Indicators> Economic Indicators> Quarterly Bulletin First Quarter 1997 |
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Quarterly
Bulletin
Volume (3) No. (1) March, 1997 Main Economic Indicators 1. Inflation First Quarter, 1997 The Consumer Price Index (CPI) for the first quarter of 1997 (March) stood at 162.2 up from the previous month (February) which stood at 161.9. A quarter earlier the index stood at 161.5 where as one year earlier the index stood at a 150.0 level. With the exception of Clothing and Footwear which declined by 0.43% and the Housing, Transportation and Services subgroup which remained unchanged during the period under review, the other subgroups showed increases as follows: Food, Beverage and Tobacco 1.28%, Furniture and Household Supplies 1.16% and Miscellaneous 0.75%. The point-to-point monthly, quarterly and annual rate of inflation stood at 0.19, 0.43 and 8.13% respectively.
At the end of the quarter under review the US dollar (the national currency) weakened against the currencies of our other major trading partners; European Union, Canada, United Kingdom and Japan. It remained fixed against the Eastern Caribbean currency. This weakening of the US dollar is expected to have moderate impacts on the domestic price levels for imports such as consumer goods, automobiles and spare parts especially, as well as many other imported goods. These increase will no doubt work their way into the general price level as it continues to move upwards.
3. Transactions with the Rest of the World Driven by no increase in imports and a 5.5% expansion in the export, the overall balance on the major items in our transactions with the Rest of the World account jumped to $6.44mn from $2.93mn during the quarter under review. The level of imports seen were just about equal to the previous quarter as a result of a fall of 3.0% in goods imported in combination with an increase 21.1% in services imported during the review quarter. On the other hand, exports were characterized by rises of 5.5% and 34.6% in services and goods exported, respectively.
A 25% jump in the national prime interest rate to 8.50% was not enough to prevent total loans outstanding from expanding 3.8% to $343.4mn compared to the fourth quarter 1996. Loans outstanding at the end of the review period amounted to an increase of 8.6% over the first quarter of 1996. Total deposits expanded to $631.8mn recording 29.6% and 2.4% growth rates over the first quarter 1996 and the fourth quarter 1996. Demand deposits, savings deposits and certificates of deposit recorded growth rates of 3.3%, 2.3% and 1.8% over the fourth quarter of 1996. Analysis of the money indicators continues to show that loans outstanding are growing (3.8%) at a faster rate than deposits (2.4%) when a comparison is made between the two most recent quarters.
During the first quarter 1997 some 39 trade licenses were approved compared to the 53 approved during the previous quarter. Although this number is comparatively smaller, it indicates that three (3) new businesses were being formed and licensed every week. As well figures suggest that approximately 2,000 licenses were already renewed for the year at the end of this review period.
The formation of local companies to conduct business within the economic jurisdiction of the British Virgin Islands continues to be steady coming in at the same level of the first quarter 1995 and just under the first quarter 1996 and reflecting an extraordinarily sustained pattern of growth in the economy. The development of a corporate structure for conducting business is also indicative of growing confidence in the economy as it reflects the notion of business opportunity generated by economic growth.
The fiscal account continued to indicate moderate growth with the exception of a spectacular fall in capital spending back to $1.61mn from the $6.28mn recorded during the 4th quarter of 1996. Current revenue was recorded at $21.5mn amounting to an increase of 17.2% and 2.5% over the first quarters of 1995 and 1996. Total expenditure, coming at $19.82mn, recorded a fall of 1.4% and an expansion of 3.3% compared to the first quarter of 1995 and 1996, respectively.
Revised figures indicate that electrical energy consumed and produced declined unusually during the review quarter compared to the previous quarter. Official sources indicate that the 2.0% and 1.5% declines in electricity generated and consumed, respectively resulted from difficulties with supply operations early in the quarter. On the other hand, a comparison with the first quarter 1996 shows increases of 4.6% and 5.4 % in electricity generated and consumed respectively. Revised figures put water production and consumption down 2.9% and 5.4% from the previous quarter. Similarly, production and consumption were down 11.0% and 6.1% compared with the first quarter 1996.
Licencing of registered cars during the review quarter was down when compared to the first quarter of 1996 and the fourth quarter 1996. The 10.6% and 8.5% declines below the first quarter 1996 figure and the fourth quarter 1996 and the review period can only be explained by either seasonality or the phenomena of unlicenced vehicles operating on the public roads. However, figures do show that the number of vehicles licenced (7,687) during 1996 increased 9.3% from 7,033 licenced in 1995.
Source: Licensing Department
The rises of the indices of total call minutes and total calls to 156 and 167, respectively signalled the continued good performance in the telecommunications sub-sector. These development in telecommunications are obviously linked to the tourism sector and the increased application of telecommunications to the information industry through media such as the internet.
Compared to the previous quarter, the import of cement and construction related steel grew 8.1% and fell 11.8%, respectively during the review period. A similar comparison with the first quarter 1996 reveals a 70.3% expansion and a 13.3% decline in cement and steel imported, respectively. The decreases seen in the imports of steel is related to one time imports in relation to structural steel for buildings.
The 79,931 overnight visitors during the first quarter, 1997 amounted to increases of 3.3%, 25.3% and 46.1% over figures observed for the first quarter 1995, the first quarter 1996 and the first quarter 1997 respectively. With an average length of stay of 7.1 days per visitor, the number of tourist nights amounted to 567,510. Tourism receipts representing aggregate of tourist expenditure climbed 5.0%, 26.6% and 49.4% over levels seen between the first quarter 1995, fourth quarter 1996 and the first quarter 1997, respectively. Cruiseship visitors increased 78.4%, 68.6% and 63.4%, respectively over the first quarter 1995 and 1996 and fourth quarter 1996.
13. International Business Companies The quarterly incorporation of new international business companies is a good indicator of the health of the international financial services sub-sector and the first quarter 1997 with an index of 327 is evidence of the continued strength in our economy. On the other hand, the number of IBC’s on the register provides evidence of the sustainability of these sectoral activities with an index 586 compared to the number registered at the end of the first quarter 1990.
IBC's Registration
14. Economic Performance Summary Review Inspite of moderately improved performance in the export sectors such as tourism and international financial services the package of economic indicators showed mixed performances in the external accounts, foreign currencies and movement in the general price level. Indicators of the internal markets in energy consumption, motor vehicle transport, communications and construction displayed positive performances. Government investment outlays were expanded threefold and commercial bank credit increased significantly. The overall balance on transactions with the Rest of the World was reduced almost fourfold as imports of capital and consumer goods (particularly food and beverages) increased substantially in anticipation of a strong peak tourist season. International financial services exports continued its strong growth and was responsible for a significant share of the incremental inflows witnessed on the current account of services. Foreign currencies such as the European Currency Unit and the British Pound were weakened against the local currency (US dollar) while the Japanese Yen gained in strength. On the internal scene, the expansion of domestic credit by 10.7%, mainly for home construction and related activities, spurred on by a reduction in the prime interest rate. Total bank deposits eclipsed the $600mn level with savings accounts and Time Certificates of Deposits together advancing close to the $500mn mark. Economic activities was ignited by a 23.5% increase in new trade licences issued and a 1.7% rise in the number of businesses operating. Local companies incorporated grew 17.1% during the quarter under review. While international financial services receipts rose some 5.7%, tourist nights, tourist arrivals and tourist expenditure expanded 4.5%, 21.5% and 16.9%, respectively over the comparative period for 1995. Government investment outlays increased threefold to $6.3mn while current expenditure grew 15.0%. However, more significantly current revenue increased by 39.4% and 6.7% over the third quarter 1996 and fourth quarter 1995, respectively. The construction and communication sectors recorded better than moderate increases while motor vehicles transport and electrical energy consumed jumped 2.9% and 10.6%, respectively as a result of the expansion witnessed in tourist activities. The economy, especially in the domestic sectors, continued to demonstrate resilience in response to improved and very good performances by the tourists and international financial services sectors. 15. ECONOMIC OUTLOOK FOR THE SECOND QUARTER, 1997 This quarter being the peak season for tourist activities, it is anticipated that the dynamic linkages to other supportive economic sectors will result in a quarter of very good economic performance. The upswing in public sector investment outlays coupled with a moderate expansion in commercial and consumer credit should continue to drive aggregate demand at increased levels. With inflation under better control in both domestic and external markets, domestic investment is expected to expand even more as investors confidence continue to grow in response to positive economic indicators and good governance. The tourist season peak is expected to be one of the best in recent times bringing with it an increase in the imports of goods and services. International financial services are expected to deliver higher levels of revenue flows to the country and the Central Government. The second quarter is expected to be an excellent one in terms of the expansion of economic output. The private and public sectors, through expanded investment outlays, are expected to benefit from very good performances in the tourist and financial services sectors.
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